A federal bankruptcy judge has ruled that Pilgrim's Pride can cancel some contracts with local poultry producers who supply the company's Live Oak, Fla., poultry plant, according to the Suwannee Democrat.

Judge Michael Lynn acknowledged the hardship his decision would cause the growers but said Pilgrim's was exercising "sound business judgment" amid the economic challenges it is facing. The Pittsburg, Texas-based poultry company sought Chapter 11 bankruptcy protection Dec. 1.

Lynn also rejected a claim by some Hispanic growers that Pilgrim's discriminated against them.

"From the evidence the court has seen, it is clear that the effect of rejection of the growers' contracts will be significant, perhaps catastrophic, for the growers and possibly even for their community," the judge reportedly wrote in his order. "Unfortunately the Live Oak plant loses money; the best way to stem that loss is to reduce operations at the plant; and in order to reduce operations, the supply of chickens to the plant must be reduced."

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